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Said letter was referred to the City Treasurer of Paraaque for comment under
a 1st Indorsement dated June 25, 2015.
In a reply-letter dated July 27, 2015, copy enclosed, the City Treasurer submits
as follows:
1.
Triplex stated in their letter dated June 19, 2015 that their
warehouse in Paraaque City is "doing cutting and sheeting of
Paper rolls we import from Abroad and buy from Local Paper
manufacturer." Thus, there is no doubt that the warehouse activity
of Triplex involves the physical means of cutting and sheeting of
paper rolls which has altered the exterior from the said paper rolls
which is clearly the raw material used. There is the need for the
cutting and sheeting to prepare the paper rolls to be sold to
customers as Triplex cannot possibly sell to its customers uncut
and not sheeted paper rolls. Clearly, the activity of Triplex's
warehouse is manufacturing as defined in Section 131 (o) of
Republic Act No. 7160, also known as the Local Government
Code of 1991, to quote:
(o) "Manufacturer includes every person who, by physical or
chemical process, alters the exterior texture or form or inner substance of
any raw material or manufactured or partially manufactured product in
such manner as to prepare it for special use or uses to which it could not
have been put in its original conditions, or who by any such process,
alters the quality of any such raw material or manufactured or partially
manufactured products so as to reduce it to marketable shape or prepare
it for any of the use of industry, or who by any such process, combines
any such raw material or manufactured or partially manufactured
products with other materials or products of the same or of different
kinds and in such manner that the finished products of such process or
manufacture can be put to a special use or uses to which such raw
material or manufactured or partially manufactured in their original
condition could not have been put, and who in addition, alters such raw
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Makati for the amount which Paraaque is charging as tax deficiencies for the last
five (5) years based on the principle of "Solutio Indebiti".
Triplex likewise submitted the following additional information:
Makati Office:
a.
All sales and invoicing are done, received and declared at the
Makati Office.
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Paraaque Site:
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b.
The cutting and/or slitting consist of cutting the paper rolls into
different sizes as needed by our customers without any process of
either adding or altering its composition or substance.
c.
Triplex is a manufacturer.
In resolving the issue of whether or not Triplex operations in Paraaque City
be considered as that of a manufacturer, the provisions of Section 131 of the LGC is
quoted once more for ready reference:
(o) "Manufacturer includes every person who, by physical or
chemical process, alters the exterior texture or form or inner substance of any
raw material or manufactured or partially manufactured product in such manner
as to prepare it for special use or uses to which it could not have been put in its
original conditions, or who by any such process, alters the quality of any such
raw material or manufactured or partially manufactured products so as to reduce
it to marketable shape or prepare it for any of the use of industry, or who by any
such process, combines any such raw material or manufactured or partially
manufactured products with other materials or products of the same or of
different kinds and in such manner that the finished products of such process or
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manufacture can be put to a special use or uses to which such raw material or
manufactured or partially manufactured in their original condition could not have
been put, and who in addition, alters such raw material or manufactured or
partially manufactured products, or combines the same to produce such finished
products for the purpose of their sale or distribution to others and not for his
own use or consumption; (Underscoring supplied)
In this connection and for purposes of local taxation the 30%-70% sales
allocation pursuant to Article 243 (b) (3) implementing Section 150 (b) (1) of the
LGC, quoted hereunder shall apply:
"(b) Sales Allocation (1) . . .
"(3) In cases where there is a factory, project office,
plant or plantation in pursuit of business, thirty percent (30%)
of all sales recorded in the principal office shall be taxable by
the city or municipality where the principal office is located and
seventy percent (70%) of all sales recorded in the principal
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